The iPhone 4 has less real estate, so far fewer pixels, so less graphics processing required. Also less energy required for the same brightness. Also the case doesn’t have to be proportionally thicker, so the extra thickness is entirely for battery.

I’d be surprised if an iPhone 4 based on new power-sipping technology wasn’t within a few percent of the web browsing/movie watching time of the iPhone 8 or similar.

There obviously are trade offs, but personally I would forego nicer screens, cameras, CPUs, and slimness to have a smaller phone. Obviously, Apple is betting that this isn't a sufficiently profitable market, but one can dream.

An iPhone XS phone doesn't even fit into most women's pockets. It'll be funny if pockets get bigger to accommodate phones.